Draghi: 'Darkest Clouds' Over Euro Area Have Subsided

European Central Bank President Mario Draghi observed Tuesday that the 'darkest clouds' over the euro area have subsided while countries reinforced their commitment to reforms.

In a speech in Frankfurt, he said resolute actions by euro area governments and European institutions have made the year 2012 quite different than predicted.

"We can begin 2013 on a more confident note, precisely because significant progress was made during 2012," Draghi said.

He said the central bank's special measures announced last year to counter the debt crisis did not alter its focus on price stability or interfered with its independence. The ECB remains steadfastly committed to its primary mandate of ensuring price stability, Draghi said.

"All of our measures are designed to achieve this goal. And looking at current and expected inflation rates, there is simply no evidence that could substantiate fears about any deviation from price stability."

He said many countries are making "solid progress" in bringing their public finances under control. "We need patience," Draghi said. "I am very well aware that for many people in the countries under adjustment, the personal economic situation can be very difficult. But there is simply no alternative to the path of reform."

He urged policymakers not to lower their collective ambitions to fix the structural flaws in the governance framework of the euro area.

Draghi said the ECB will assume a major new responsibility to prepare for becoming the new euro area banking supervisor later this year once the legal texts have been adopted. He said that the internal work is already underway.

"You can rest assured that we will work hard to ensure that the ECB will deliver on its responsibilities to the highest possible standard," he added.

The ECB expects euro area economy to contract 0.3 percent in 2013. Amid severe austerity and weak demand, the euro area economy slipped into recession in the third quarter of 2012.